define demand, needs, types of demand n needs

Definition: Demand is the want or desire to possess a good or service with the necessary goods,
services, or financial instruments necessary to make a legal transaction for those goods or services.

Aggregate Demand Definition: Aggregate demand is the sum of all demand in an economy. This
can be computed by adding the expenditure on consumer goods and services, investment, and not
exports (total exports minus total imports).

Demand
In economics, we need to use terms a little more carefully than they are sometimes used in
ordinary discussions. In general use, "Demand" is a word that can have more than one meaning,
but in microeconomics we define it more carefully so that it has only one meaning. Here is the
definition:
Definition: Demand
Demand is the relationship between price and quantity demanded for a particular good
and service in particular circumstances. For each price the demand relationship tells the
quantity the buyers want to buy at that corresponding price. The quantity the buyers want
to buy at a particular price is called the Quantity Demanded.
The key point is to distinguish between demand (the relationship) and quantity demanded. That
distinction is important for microeconomics, although people often do not make it in ordinary
discussion.

Why do we define demand in this specialized way? Here are some reasons:

Demand and Need

To keep it simple, we may think of the buyers as consumers. (Later we will look at markets for
inputs to production, in which the buyers are producers of other goods and services). Clearly, the
buyers are the people who want or need the product or service -- but there is more to it than that.
The word "demand" refers to the willingness and ability of people to purchase the good or
service in the market. The demand relationship expresses that willingness and ability for the
whole range of prices. To say that a person has a demand for a particular product is to say that
the person has money with which to buy and is willing to exchange the money for the good.
People will not demand what they do not want or need, but a want or a need unbacked by
purchasing power is not a demand.

Similarly, it is not enough that the suppliers possess the good or (the capacity to perform) the
service. Supply also means willingness to sell.

Most of us have experience living in the market economic system, and that makes economics
seem like a common-sense field -- but sometimes that common-sense feel can be deceptive.
People sometimes use the term "demand" ambiguously -- as if "demand" were the same thing as
need. But it is not. Need without purchasing power will not create effective demand in the
marketplace. Economists sometimes stress this point by using the term "effective demand" in
place of simple "demand."

The Demand Relation

"Demand" can be ambiguous in another way. We should not think of "demand" as a particular
quantity -- because the quantity that people are willing and able to purchase will change when
the price changes. Economics assumes that there is a systematic relationship between the price in
the marketplace and the quantity that people are willing and able to buy. This relationship is
called "the demand relationship" or, simply "demand." The quantity that people buy at each price
is called the "quantity demanded" at that price. We think of the "demand relationship" as a
relationship between the price and the quantity demanded.

It is important to distinguish between the demand relationship and the quantity demanded. This
may seem like "splitting hairs," but not making the distinction between them causes a lot of
confusion. The convention in economics is to use the word "demand" to mean the demand
relationship and "quantity demanded" for the specific quantity that people are willing to
purchase, when there could be confusion.

Example of The Demand Relation

As we have seen, economists think of the demand for a good or service as a
relationship between the price of the good or service and the quantity demanded of
that good or service. Common sense says that the relationship is an inverse one;
that is, that an increase in price will result in a decrease in the quantity demanded.
In this, common sense is absolutely right. The higher the price, the less quantity
demanded, and conversely, the lower the price, the more quantity demanded.

Many economics textbooks use examples based on hypothetical (made-up) numbers. There is
nothing wrong with that and we shall use some of them later on. But why not use a real example?
Several years ago, the author estimated the demand relationship for beer. Here is an example
based on that estimate. The prices quoted are wholesale prices, in cents of 1972 purchasing
power. Quantity demanded is measured in millions of gallons, for the United States as a whole.

Demand Schedule
Beer, 1960

price, Quantity
cents/ga demanded
l. ,
 millions
of gals.

50 4899.27
60 4355.67
70 3812.07
80 3268.47
90 2724.87
100 2181.27
110 1637.67
120 1094.07

Demand Diagram for Beer

The demand relationship can also be expressed as a diagram, with the price on one axis and the
quantity demanded on the other axis. Conventionally, in economics, we put the price on the
vertical axis, and the quantity demanded on the vertical axis. This diagram will usually take the
form of a line or curve. We usually call it "the demand curve" (even when it is a straight line).

Here is a "demand curve" of the demand for beer in 1960, based on the estimated numbers from
the previous page.
 Figure 1. Demand for Beer

The Demand Relationship, Again

Remember: when we speak of "demand" we usually mean the entire demand
relationship, that is, the entire demand curve or table. By contrast, the "quantity
demanded" is the particular point on the demand curve, as in Figure 2 below, or the
quantity in a particular line of the table.

Figure 2: Demand Terminology

The "Law of Demand"

Notice that, in this example, the demand curve is downward sloping. That's a common-sense
point: the higher the price, the less people will want to buy. In this case, common-sense has it
100% right.

Economists call this the Law of Demand:

At a higher price, the quantity demanded will be less, ceteris paribus.

(Ceteris paribus means: if nothing else changes to offset the change in price).

The Demand Relationship: 3 More Points

The example also illustrates three important points about the demand relation:

1. The price must always be adjusted for inflation. We use the "real" (adjusted) price, not the
nominal price.

2. The demand relationship can be represented, and approximated, by

• numerical
• graphical, or
• mathematical and statistical methods
• statements in a computer programming language

3. Mathematically, the demand schedule and diagram we have just seen can also be expressed as

Q = 7617.27 - 54.36*P

The Demand Relationship: Summary

In summary: as these examples show, the demand relationship can be represented, and
approximated, by numerical or graphical methods. Mathematical, statistical and computational
methods may also be used, and in professional applications, they are absolutely necessary. The
numerical tables are easiest, but the others convey more information. The mathematical
representation is most powerful and flexible. The graphical representation is more abstract, but it
conveys a lot of information pretty quickly, and economists rely on it a lot.

Customer & its types –

To enhance our understanding and comprehension of customer, I offer Webster's definition as a logical starting point: 1) a
person who buys, especially on a regular basis; 2) a person with whom one must deal. At the end of the day customers are

the sole provider of every business—the revenue stream that pays for everything else. You can have the best product, the

best accountant, the best management, and so on, but you have nothing without a revenue stream. And the revenue

stream is the direct contribution of sales, period. Nothing happens until something is sold.

Let's look at the six types of customers.

• 1. External Customer. These are the people

and organizations who have a need for your

product or service. They purchase your stuff in

exchange for money. They have a budget and

will give you some of it in exchange for a

solution that meets their needs and

expectations. Given that, I affectionately refer

to external customers as ones with the bag of

money. They have the financial autonomy to

decide where and how they will spend their

budget—the bag of money. The question is,

who gets the bag of money, you or your

competitor? Who has earned the confidence

and trust of the customer? You and your

competitor are vying for a piece of their

budget—the best solution wins. Know this:

Customers vote with their money and complain

with their feet.

• 2. Allies. These are the users of your product

or service, not the ultimate decision maker.

These customers usually don't have a bag of

money but they play a vital role in your

success. They do not make the final decision

but they may have tremendous impact on the outcome. They are often closely connected to the bag of money

and positioning them as an ally to your cause is critical for your success. You must earn their trust and

confidence if you expect them to support you at the bag of money level. A caution about allies: They have veto

power, the authority to say no. They can give you a hundred no's but can't give you the one yes needed to close

the deal. I have seen countless selling hours wasted on allies with the hope of closing the deal. However, allies

can be a tremendous wealth of information. Pick their brains and learn how you can differentiate yourself from
 the competition. Customers buy differences, not similarities. It can sometimes be difficult to ascertain who the

bag of money is and who the allies are. Ask questions early in the call to determine who's who in the zoo. Shrink

your sales cycle by understanding the players within your accounts. Simply ask them who else may be involved

with decisions.

• 3. Internal Customer. These are fellow employees and managers within your place of business. They support you

and make you look good to your external customers. Appreciate them and treat them with respect.

Unfortunately, they are often the victims of your blamefest: "The jerks in production screwed up again ..." or

"The idiots in shipping messed up . . ." or "Management gave me a lousy price . . ." and so it goes. Poor internal

relationships can have fatal consequences for your external customers. I recently saw an anonymous quote that

supports my point. "We have less to fear from outside competition than from inside conflict, inefficiencies,

discourtesy, and bad service." So true. Take ownership for customer concerns. After all, you are an ambassador

for your company, so don't abdicate responsibility for late deliveries, poor service, and inadequate support.

Customers really don't care whose fault a problem is or how it happened. Customers aren't interested in fixing

the blame. They want to fix the problem. It's up to you to quarterback all of the company's resources to resolve

their problem.When you work in harmony with your internal customers, external customers become the

beneficiary of your internal relationships. In company after company, I see sales working in isolation from other

departments. Sales cannot fly solo and expect to service the expectations of external customers. Long-term

success means having your entire company and all its resources focus on its customers. Be aware too of your own

personal internal customers, such as family, spouse, and parents. View your kids, spouse, or significant other as

your personal internal customers. They also deserve respectful treatment.

• 4. Repeat Customer. They are the jewels of your business. Do the job well the first time and you often get

rewarded with another opportunity to serve them. And guess what? They give you more money! You may have

heard that it costs up to five times as much to replace a customer as it does to keep one. So, keep them happy.

Underpromise and overdeliver.

• 5. Born-Again Customer. These are previous customers who no longer do business with you. For some reason

they have forgotten about you or they are still upset with you. I suggest you dig up their file, give them a call,

and settle any outstanding grievance. Put your ego aside and offer restitution to satisfy the customer. Do what it

takes to resolve the situation. Make amends. Very frequently they will once again be receptive to doing business

with you. They often become loyal customers provided you resolve the problem to their satisfaction. As you work

with your customers, you will find the Sequential Model is applicable to all six types. Remember: Pay particular

attention to your internal customers.

• 6. Bag of Wind. You guessed it, these people have little or no impact on the decision. They are often an easy

point of entry into an account but they seldom contribute to the sales process. In fact they do more harm than
 good by creating a false sense of authority. There is nothing worse than wasting valuable selling hours on people

who cannot help advance the sale. However, I'm not suggesting to ignore these people but rather exploit their

knowledge to deepen your understanding and confidence about the account. They may also provide clarity as to

who the allies are and who the bag of money is. Knowing these people can prove to be a huge advantage;

knowledge is power.

Customer Types

The "Demolition" Customer

The type of customer that takes their shopping trolley and drives it like they're in a demolition derby.
Hitting displays, people and other shopping trolleys as they race their way through the store.

The "Scene" Customer

The type of customer that needs to make a scene every time they come into your store. Whether it's
by yelling at the manager, employees or just belting their kid in the middle of the store.

The "Out of Everything" Customer

This breed of customer isn't always a pain, only when they get pissed off. These customers are the
types that come in and for some reason 90% of all the things they're looking for are out of stock.

The "Coupon" Customer

A customer that always comes up to the register with a hand bag full of coupons and has to dig
through this bag every time they come into your store.

The "Grubby Hand" Customer

These customers always come into your store with hands so dirty you'd swear they were just playing
with horse crap. Then they end up getting the crud all over your hands in the process of giving you
their money.

The "I swear I bought it like this" Customer

This customer will bring back a jacket with a huge stain from food, etc... on the front of it and swears
that he bought it like that when you refuse to take it back. Then he asks for the manager and, when
the manager refuses to take it back, walks out of the store shouting that he is never going to shop
there again, like we care.

The "Typhoid Mary" Customer

Despite presence of highly infectious disease(s), still feels it necessary to violate their quarantine and
unleash whatever plague it is they happen to be carrying upon the hapless retail employee. Most
often by coughing directly onto money, or cutting to the chase and coughing directly in your face.

The "Innocent" Customer

This is the kind of customer who gets caught stealing or doing something else they should not be
doing, like masturbating in the fitting rooms. When they are caught red handed by the staff AND the
video camera, and their stolen items fall out of their jacket onto the floor in front of everybody, they
STILL maintain their innocence and act offended at the accusation.

The "Let's see what happens" Customer

This is a customer who for some unknown reason will place their credit card, money, coupons, etc. on
the movable belt at the check out. When the aforementioned articles disappear at the gap at the end
of the belt --- they stand and wonder what happened.
The "Coma" Customer
They come into your store and look like they've been in a coma for 10 years. Wearing clothing that's
too many sizes too small so their beer belly hangs out or they're wearing spandex pants that can
barely hold in the cottage cheese on their legs.

The "8+3+1+7+23+2+4+1+6=12 items" Customer

The type of customer that has mathematically worked out that even though they have a shopping
trolley loaded with stuff they still qualify to use the express line. Thus bringing the line to a complete
halt while ringing up their 203 items.

The "Need a Closer Look" Customer

The type of customer that always barges their way behind the counter because they can't see a
certain product on the shelf.

The "My Brother/Sister" Customer

The type of customer who assumes that because you are either the same race, from the same part of
town, etc. as they are, you'll give them some kind of discount.

The "My Baby Is Teething" Customer

This is the customer who lets their young child suck on anything they can get their hands since it's too
much of a hassle to use a dummy. Then they hand it to you at the register without wiping it off so that
you can get baby gob all over your hands. More often than not, they're giving it to you because they
don't want it rather than to buy it or they picked up another one because they don't want the wet one.

The "Mix it all together" Customer

This one combines different priced produce items in a single bag and then gets upset when you have
to undo their "Houdini" knot to weigh and correctly charge them for their selections.

The "Just Sampling" Customer

Makes the rounds in your store making sure to sample all of the promotional sale products and then
walk out of your store purchasing nothing. Extra points for bringing in the rest of their clan to truly
make it a "night out."